Transurban Group Ltd. · ASX:TCL
Transurban — Investor Presentation (December 2017)
70 slides from Transurban's investor presentation, Dec 12, 2017
Slide 1: West Gate Tunnel Project – Transurban equity raising
West Gate Tunnel Project For personal use only Transurban equity raising 12 December 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 2: Disclaimer
Disclaimer This investor presentation (“Presentation”) has been prepared by Transurban Holdings Limited (ACN 098 143 429) (“THL”), Transurban International Limited (ACN 121 746 825) (“TIL”) and Transurban Infrastructure Management Limited (ACN 098 147 678; AFSL 246585) as the responsible entity of T
Slide 3: Disclaimer
Disclaimer FUTURE PERFORMANCE This Presentation may contain certain forward-looking statements. The words “anticipate”, “believe”, “expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “outlook”, “should”, “could”, “may”, “target”, “plan” and other similar For personal use only expression
Slide 4: Disclaimer
Disclaimer Each recipient of this Presentation should make its own enquiries and investigations regarding all information included in this Presentation including the assumptions, uncertainties and contingencies which may affect Transurban’s future operations and the values and the impact that future
Slide 5: Contents
Contents For personal use only 1 Transaction overview 5 Supplementary information i. Funding sources and financials 2 West Gate Tunnel Project ii. Key risks iii. International offer restrictions iv. Glossary 3 Transurban overview 4 Summary INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DIS
Slide 6: Transaction overview
For personal use only 1 Transaction overview INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 7: Transaction overview
Transaction overview • Transurban to raise $1.9 billion through a fully underwritten For personal use only renounceable entitlement offer with retail rights trading • The proceeds raised will contribute to funding Transurban’s share ($4.0 billion) of the West Gate Tunnel Project1 (WGTP or the Projec
Slide 8: Aligned with strategy
Aligned with strategy To be the partner of choice with governments providing effective and innovative urban road For personal use only infrastructure and services utilising core capabilities Network planning Community Development Technology Operations Customer / forecasting engagement / delivery man
Slide 9: Distribution growth
Distribution growth • 1H18 distribution of 28.0 cps to be paid on 16 February 2018 For personal use only • FY18 distribution guidance of 56.0 cps reaffirmed1 supported by stronger performance • FY18 distribution expected to be approximately 100 per cent free cash covered and include a 5.0 cps fully
Slide 10: West Gate Tunnel Project
For personal use only 2 West Gate Tunnel Project INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 11: Melbourne market
Melbourne market • In 2016, approximately 903,0001 people travelled to, or were present in the City of Melbourne on an average weekday. The City of Melbourne expects For personal use only this figure to grow by 55% to 1,402,0001 by 2036 Population growth (2006-16 CAGR)8 3.9% • The State expects Melb
Slide 12: Project components
Project components1 For personal use only D B C A E F 1. This is an illustration for indicative purposes only, does not reflect scale. INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 12
Slide 13: Project components
Project components WGTP comprises three main components As part of an integrated transport solution, Transurban is also For personal use only delivering the following projects within the funding framework A West Gate Freeway upgrade and widening D Monash Freeway Upgrade • Upgrade and widening betwee
Slide 14: Project benefits—keeping Melbourne moving
Project benefits—keeping Melbourne moving Expected benefits of Key enhancements driven by Community benefits from Expected freight benefits1 For personal use only West Gate Tunnel Project1 community engagement CityLink concession changes2 • Combined with MFU, providing • 26 months of engagement to •
Slide 15: WGTP funding sources
WGTP funding sources1 Transurban has entered into a number of agreements with the State to deliver WGTP. Construction phase has For personal use only commenced and is due to complete in 2022. To support the financing, delivery and operation of WGTP, Transurban will use the following funding sources:
Slide 16: CityLink funding sources
CityLink funding sources1 For personal use only CityLink WGTP will provide benefits for the broader transport network of Melbourne. To support the financing, delivery and operation of this essential infrastructure for Victoria, the funding sources from CityLink will be: • Toll revenue from a 10 year
Slide 17: Traffic characteristics
Traffic characteristics Transurban has extensive experience in forecasting traffic For personal use only • WGTP traffic is expected to increase steadily and experience a ramp-up profile1 • In 2016, weekday traffic was approximately 330,000 trips • Population Land use on CityLink and 200,0002 on WGF
Slide 18: Statutory considerations
Statutory considerations1 For personal use only WGTP CityLink • Legislation is not required to be passed in order to construct • Amendments are required to the existing CityLink concession in and toll the WGTP order to implement the CityLink funding sources. These amendments require successful passa
Slide 19: D&C overview
D&C overview For personal use only Delivery managed Total project costs include WGTP D&C and associated costs of • Transurban has significant experience and approximately $5.5 billion1. Transurban will contribute $4.0 billion by an experienced expertise in delivering large-scale projects over the co
Slide 20: Delivery environment
Delivery environment For personal use only • Transurban working with all stakeholder groups to deliver the Project’s benefits Business partners Employees • First major new road project in Melbourne to commence construction since 2010 • Extensive community engagement resulted in significant enhanceme
Slide 21: Transurban overview
For personal use only 3 Transurban overview INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 22: Transurban
Transurban Transurban is a global leader in road LONG-LIFE TOLL ROAD EMBEDDED INFLATION For personal use only development, delivery, operations and CONCESSIONS PROTECTION FOR technology AUSTRALIAN ASSETS • Melbourne, Australia headquarters • Approximately 70 per cent of Transurban's investors are Au
Slide 23: Transurban
Transurban Sydney Brisbane For personal use only Number of FY17 proportional operational toll revenue assets contribution 6 40.5% 1 31.9% 6 17.9% 2 9.7% Melbourne Greater Washington Area INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 23
Slide 24: Operational and development update
Operational and development update For personal use only Sydney • NorthConnex continues to progress on time and on budget • A third westbound lane on the M2, as part of the integration with NorthConnex, has opened three months ahead of schedule • Response to Invitation to Register was submitted for
Slide 25: $11 billion development pipeline
$11 billion development pipeline1 FY18 FY19 FY20 FY21 FY22 For personal use only COMMITTED CITYLINK TULLA WIDENING Melbourne ($1.0 billion) PROJECTS UNDER CONSTRUCTION2 WEBB DOCK ACCESS4 Melbourne INNER CITY BYPASS Brisbane ($37.5 million) MONASH FREEWAY UPGRADE4 Melbourne LOGAN ENHANCEMENT PROJECT
Slide 26: Capital strategy
Capital strategy For personal use only Consistently growing Maintain strong investment Cost efficient funding Efficiently fund growth distributions while creating grade credit metrics through market cycles long term value • Financial flexibility maintained to pursue Transurban’s pipeline of investme
Slide 27: Summary
For personal use only 4 Summary INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 28: Entitlement Offer key details
Entitlement Offer key details Fully underwritten 3 for 37 accelerated pro rata renounceable entitlement offer with retail entitlements trading (PAITREO) Structure and size to raise gross proceeds of approximately $1.9 billion For personal use only New Securities rank equally with ordinary securities
Slide 29: Offer timetable
Offer timetable Dates and times are subject to change without notice Announcement of contractual close and Entitlement Offer, trading halt and Institutional Entitlement Offer opens 12 December 2017 For personal use only Announcement of completion of the Institutional Entitlement Offer and Institutio
Slide 30: Summary
Summary An essential new • Transurban has achieved contractual close with the State and the construction phase has commenced to build, toll and operate WGTP until 2045 For personal use only infrastructure asset for Melbourne • WGTP is a significant transport project to relieve congestion in Melbourn
Slide 31: Supplementary information: Funding sources and financials
For personal use only 5 Supplementary information (i) Funding sources and financials INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 32: Construction and statutory impacts on funding sources
Construction and statutory impacts on funding sources1 The WGTP and CityLink funding sources are outlined on slides 15, 16 and 18. These funding sources can be impacted by certain factors, including a failure to reach For personal use only construction completion on WGTP and whether or not the requi
Slide 33: Construction and statutory impacts on funding sources (continued)
Construction and statutory impacts on funding sources1 (continued) For personal use only WGTP legislation and CityLink Concession Deed amendments do not successfully pass through Parliament WGTP Transurban will collect WGTP tolls from construction completion3 and such tolls will escalate at 4.25% p.
Slide 34: Detailed project design
Detailed project design Project scope map toll points and prices1 City access For personal use only (AM peak only) Car $4.84 LCV $7.74 Tunnel Car $3.02 LCV $4.84 HCV Toll Day $14.62 Night $9.75 HPFV Toll Day $21.92 Night $14.62 LEGEND Surface road Elevated road/ramp Tunnel underground Traffic direct
Slide 35: Traffic—key projections from EES
Traffic—key projections from EES1 2016 2031 For personal use only Road section figures2 projections2 EES reference Project components WGT Total vehicles n/a 55,000-67,0003 Technical report A —Transport Impact Assessment (May 2017) p228 Hyde Street Total vehicles n/a 3,000-5,0004 Technical report A—T
Slide 36: Key financials—basis of preparation
Key financials—basis of preparation For personal use only The Transurban financial information included in this Presentation has been extracted from the audited statutory financial statements for the respective periods presented. No pro forma adjustments were required for Transurban’s FY16 and FY17
Slide 37: Balance Sheet—statutory and pro forma
Balance Sheet—statutory and pro forma As at 30 June 2017 ($M) TCL (audited) Equity funding Pro forma For personal use only Assets Cash and cash equivalents 988 1,866 2,8541 Intangible assets 19,330 - 19,330 Property, plant and equipment 327 - 327 Other current assets 295 - 295 Other non-current asse
Slide 38: Supplementary information: Key risks
For personal use only 5 Supplementary information (ii) Key risks INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 39: Key risks
Key risks This section discusses some of the key risks associated with any investment in Transurban which may affect the value of Transurban securities. The risks set out below are not listed in order of importance and do not necessarily constitute an exhaustive list of all risks involved with an in
Slide 40: Project risks
Project risks 1.1 Applicable WGTP legislation not currently passed Transurban’s right to construct and toll the WGT is set out in the WGT Project Agreement and is not currently legislated. For personal use only The State has confirmed that it is Government policy intention to implement the necessary
Slide 41: Project risks
Project risks If the amendments do not successfully pass through the Victorian Parliament during the WGTP construction period, the State has agreed to replace the CityLink funding sources with completion / substitution payments inclusive of an agreed return consistent with Transurban’s investment me
Slide 42: Project risks
Project risks The WGTP planning scheme amendment is required to be tabled in both Houses of Parliament and not be revoked within 10 sitting days. In the event that the WGTP planning scheme amendment was revoked, and not subsequently successfully tabled and passed, the State could elect to terminate
Slide 43: Project risks
Project risks If the D&C contractor needed to be replaced, there could be significant delay to completion and any replacement contractor may not accept the same risk allocation. This could have a material adverse effect on Transurban’s business, cash flows, financial condition and results of operati
Slide 44: Project risks
Project risks 1.9 Tax The Australian Taxation Office closely scrutinises large infrastructure transactions and new projects in Australia and provides formal and informal guidance about the For personal use only way it will administer the application of the Australian taxation laws to these transacti
Slide 45: Business risks
Business risks 2.1 Transurban’s concession agreements have finite lives Transurban’s business is dependent on concession agreements that have been granted to members of the Transurban group, or entities in which Transurban has an For personal use only interest, to operate various toll roads in Austr
Slide 46: Business risks
Business risks Many of these factors, including the number and classes of vehicles using Transurban’s toll roads are, to a large extent, outside of its control. If Transurban’s toll roads are unable to maintain or grow an adequate level of vehicle traffic, or if traffic volumes decrease or experienc
Slide 47: Business risks
Business risks 2.4 Restrictions on toll price Most of Transurban’s concession agreements contain mechanisms that regulate the tolls that can be charged for using the relevant toll road. The mechanism used For personal use only generally provides for increases in tolls on a quarterly or annual basis
Slide 48: Business risks
Business risks In connection with the Project, Transurban has agreed a number of changes to the CityLink concession deed which require successful passage through Parliament. If the agreed changes successfully pass through Parliament, certain existing protections afforded to Transurban in connection
Slide 49: Business risks
Business risks 2.8 Relationship with government Transurban’s relationship with government entities is key to ensuring the continuity of its existing concession agreements and future opportunities for growth of its toll For personal use only roads. If Transurban is prevented from exercising its mater
Slide 50: Business risks
Business risks In the event that any of these contractors or counterparties are unable or unwilling to perform the obligations owed to Transurban, Transurban could suffer material disruptions to its operations. Disruptions to Transurban’s operations or inadequately performed services could result in
Slide 51: Business risks
Business risks 2.13 Acquisitions The Transurban group has in the past expanded its portfolio through acquisitions or bids for new projects. In the future, in addition to developing the WGTP, For personal use only Transurban may seek to acquire or develop additional toll roads, assets or businesses.
Slide 52: Business risks
Business risks 2.15 Systems, information technology and confidential information Transurban relies on operating, maintenance, traffic management and safety technology and systems to optimise the safe and efficient operation of its toll roads. For personal use only The failure of these systems, inclu
Slide 53: Business risks
Business risks Transurban is exposed to risks associated with debt financing, including that it will be unable to arrange financing for growth projects or the refinancing of its existing indebtedness as and when required, on the terms expected or at all. If Transurban is able to refinance its existi
Slide 54: Business risks
Business risks 2.19 Foreign exchange risk Transurban is exposed to foreign exchange risks due to fluctuations in foreign exchange rates. A portion of Transurban’s investments is and will continue to be For personal use only denominated in, or generate cash flow in, U.S. dollars, while its reporting
Slide 55: Business risks
Business risks 2.23 Risks of accidents or other incidents relating to toll roads Transurban is subject to the risk of accidents and incidents on its toll roads and adjacent and feeder roads and sites, as well as to weather conditions, natural For personal use only phenomena, natural disasters, vanda
Slide 56: Offer and general risks
Offer and general risks 3.1 Underwriting risk Transurban has entered into an underwriting agreement under which three underwriters have agreed to fully underwrite the Entitlement Offer, subject to the terms and For personal use only conditions of the underwriting agreement between the parties. The u
Slide 57: Offer and general risks
Offer and general risks The ability to sell New Securities under the bookbuild and the ability to obtain any premium will be dependent upon various factors, including market conditions. Further, the bookbuild price may not be the highest price available, but will be determined having regard to a num
Slide 58: Offer and general risks
Offer and general risks You should also note that if you sell or transfer all or part of your entitlements, then your percentage security holding in Transurban will be diluted by not participating to the full extent in the Entitlement Offer. For personal use only The tax consequences from selling or
Slide 59: Offer and general risks
Offer and general risks 3.6 Changes to accounting standards Changes to Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations For personal use only and the Corporations Act could affect Transurban’s report
Slide 60: Offer and general risks
Offer and general risks Adverse tax developments, including the factors described above, could materially increase Transurban’s tax liabilities or timing of its tax payments, which could have a material adverse effect on its business, cash flow, financial condition and results of operations. For per
Slide 61: Offer and general risks
Offer and general risks The renewal of insurance will be dependent on a number of factors, such as the continued availability of coverage, the nature of risks to be covered, the extent of the proposed coverage and costs involved. The cost of Transurban’s insurance policies could significantly increa
Slide 62: Supplementary information: International offer restrictions
For personal use only 5 Supplementary information (iii) International offer restrictions INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 63: International offer restrictions
International offer restrictions This document does not constitute an offer of entitlements or New Securities in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the entitlements and New Securities may not be offered or sold, in a
Slide 64: International offer restrictions
International offer restrictions Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than (a) in the case of any action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or (b) in the case
Slide 65: International offer restrictions
International offer restrictions HONG KONG WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and For personal use only Futures C
Slide 66: International offer restrictions
International offer restrictions KOREA Transurban is not making any representation with respect to the eligibility of any recipients of this document to acquire the entitlements or the New Securities under the laws of Korea, including, without limitation, the Foreign Exchange For personal use only T
Slide 67: International offer restrictions
International offer restrictions This document has been given to you on the basis that you are (i) an existing holder of Transurban’s shares, (ii) an "institutional investor" (as defined in the SFA) or (iii) a "relevant person" (as defined in section 275(2) of the SFA). In the event that you are not
Slide 68: International offer restrictions
International offer restrictions Any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received in connection with the issue or sale of the entitlements or the New Securities has only been communicated or caused to be communicated and will only
Slide 69: Supplementary information: Glossary
For personal use only 5 Supplementary information (iv) Glossary INVESTOR PRESENTATION | DECEMBER 2017 NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Slide 70: Glossary
Glossary Term Definition Term Definition 1H/2H First or second half of a financial year M5 M5 South West Motorway For personal use only AEDT Australian Eastern Daylight Time M7 Westlink M7 ASX Australian Securities Exchange MFU Monash Freeway Upgrade ATO Australian Tax Office NEW SECURITIES Transurb
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